2009 (12) TMI 124 - AT - Service Tax

Cenvat credit allowed for garden maintenance services used in or relating to manufacture or taxpayer's business activity

CESTAT, MUMBAI - AT held that Cenvat credit on garden maintenance services is admissible where such services are used in or in relation to manufacture of ... Cenvat Credit on garden maintenance service - Input service under rule 2(l) - HELD THAT:- The definition of input is exhaustive and is restrictive in scope. It treats all goods used in or in relation to manufacture of final products or for any other purpose within the factory of production. But certain goods which would be eligible as per definition have been excluded and certain goods which could be interpreted as not includible have been specifically included i.e., Packing material, lubricating oil, accessories etc. Therefore, all goods other than specified as includible have to be shown to be used in or in relation to manufacture of final product or for any other purpose within the factory of production. Thus, it is clear that the intention of the Legislature was that these activities should be relating to the business. But in then case of Maruti Suzuki Ltd. [2009 (8) TMI 14 - SUPREME COURT], the Hon'ble Apex Court has considered the word 'input' in rule 2(k) of Cenvat Credit Rules, 2004 and there is no finding with regard to 'input service'. Therefore, the reference of Ld. DR in the case of Maruti Suzuki Ltd. (supra) is no help to him. The appellant is entitled to Cenvat credit availed on the garden maintenance service which are used in or in relation to the manufacture of final products or used in relation to the business activity and in this case the services used by the appellants are in relation to the business activity, he is entitled for Cenvat credit. Accordingly, the appeal is allowed. Issues Involved:1. Denial of CENVAT credit on garden maintenance service.2. Whether garden maintenance service qualifies as an 'input service' under rule 2(l) of the CENVAT Credit Rules, 2004.Issue-wise Detailed Analysis:1. Denial of CENVAT Credit on Garden Maintenance Service:The appellant filed an appeal against the denial of CENVAT credit on garden maintenance service. The primary issue was whether such a service qualifies as an 'input service' under rule 2(l) of the CENVAT Credit Rules, 2004.2. Whether Garden Maintenance Service Qualifies as an 'Input Service':The appellant's advocate cited the case of Millipore India Ltd. v. CCE, where the Tribunal held that services related to modernization, renovation, and landscaping of factory premises are considered 'input services' under rule 2(l) of the CENVAT Credit Rules, 2004. Conversely, the respondent's representative relied on the Kirloskar Oil Engines Ltd. v. CCE decision, which stated that garden maintenance service has no nexus to the manufacture or clearance of excisable goods.Definition of Input Service:The definition under rule 2(l) of the CENVAT Credit Rules, 2004, includes services used directly or indirectly in relation to the manufacture of final products and their clearance from the place of removal. It also encompasses services related to setting up, modernization, renovation, or repairs of a factory, advertisement, sales promotion, market research, and other business activities.Analysis of Relevant Case Law:The learned DR referenced the Coca-Cola India (P.) Ltd. v. CCE decision, which divided the definition of input service into five categories, emphasizing that services used in relation to business activities are eligible for CENVAT credit. The High Court in this case clarified that input services must be allowed as long as they form part of the assessable value of the final products.Comparative Analysis of Input and Input Service:The Maruti Suzuki Ltd. v. CCE case was cited to argue that inputs must be used in or in relation to the manufacture of final products to be eligible for credit. However, the definitions of 'input' and 'input service' are not identical. The definition of 'input' is restrictive, focusing on goods used in manufacturing, while 'input service' is broader, covering various business-related activities.Tribunal's Findings:The Tribunal found that the definition of input service under rule 2(l) is broader and includes services used in relation to business activities. The Coca-Cola India (P.) Ltd. decision was not considered in the Kirloskar Oil Engines Ltd. case. The Tribunal emphasized that garden maintenance contributes to a better working environment, enhancing efficiency and creating a positive impression on consumers.Conclusion:The Tribunal concluded that the appellant is entitled to CENVAT credit for garden maintenance services, as these services are used in relation to business activities. The appeal was allowed, affirming the appellant's right to avail of the CENVAT credit on garden maintenance services.